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Michigan health care ruling fails economics test

November 19, 2014

A federal court in Michigan recently ignored reasoning used by other judges in Virginia and Florida and dismissed a private lawsuit against the federal health care reform law. The judge in Michigan relied on an argument by Congress that mandating everyone to have insurance will eventually lower overall costs for health care. But that line of thinking disregards a half-century of experience with health insurance in the United States.

In 1960, when Americans paid almost half of all medical costs out of their pockets, health care costs were roughly the same as in 1935 when compared to the cost of other goods and services. By 2006, when Americans paid less than 13 percent of their medical costs out-of-pocket, overall health care costs had more than doubled compared to everything else.

In other words, costs went up, not down, as Americans became more dependent on health insurance. While it’s true insurance becomes cheaper when people unlikely to make a claim pay for it anyway, this has no bearing on the cost of health care that people buy insurance to cover.

The federal judges in Virginia and Florida are interested in economic reality and constitutional principles, which is why they are closely considering the legal challenges to federal health care reform. And that’s why the Goldwater Institute is pursuing another lawsuit here in Arizona on behalf of private citizens and federal and state lawmakers who want real reforms to make health care more affordable.

Dr. Byron Schlomach is an economist and director of the Center for Economic Prosperity at the Goldwater Institute.

Learn More:

Goldwater Institute: Removing the Middleman: What States Can Do to Make Health Care More Responsive to Patients

Goldwater Institute: Coons v. Geithner

Washington Post: The health-insurance mandate is found to be legally sound (in Michigan)

Fox News: Constitutional or Not? Debate over Obamacare continues



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